Euronext - 2020 Universal Registration Document

Operating and Financial Review

Overview

Currency Risk The Group’s net assets are exposed to the foreign currency risk arising from the translation of assets and liabilities of subsidiaries with functional currencies other than the Euro. The following table summarises the assets and liabilities recorded in GBP functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet as of 31 December 2020 and 2019:

2020

2019

In thousands

Assets

£74,334

£58,755

Liabilities

£(8,758)

£(7,561)

Net currency position

£65,576

£51,194

Net currency position after hedge

£38,290

£24,052

Absolute impact on equity of 10% in/decrease in the currency exchange rate

€4,276

€2,841

The following table summarises the assets and liabilities recorded in USD functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet as of 31 December 2020 and 2019:

2020

2019

In thousands

Assets

$205,286

$194,824

Liabilities

$(13,766)

$(12,322)

Net currency position

$191,520

$182,502

Absolute impact on equity of 10% in/decrease in the currency exchange rate

€15,666

€16,253

The following table summarises the assets and liabilities recorded in NOK functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet as of 31 December 2020 and 2019:

2020

2019

In thousands

Assets

kr9,362,231

kr8,489,992

Liabilities

kr(1,900,044)

kr(1,161,871)

Net currency position

kr7,462,187

kr7,328,121

Absolute impact on equity of 10% in/decrease in the currency exchange rate

€71,089

€74,322

counterparties’ credit ratings are permanently monitored and individual counterparty limits are reviewed on a regular basis. In addition to the intrinsic creditworthiness of counterparties, the Group’s policies also prescribe the diversification of counterparties (banks, financial institutions, funds) so as to avoid a concentration of risk. Derivatives are negotiated with leading high-grade banks. The Group’s trade and contract receivables, and other debt financial assets at amortised cost and FVOCI are exposed to credit risk. The maximum exposure to credit risk at the reporting date is the carrying value of each class of these financial assets. The Group evaluates the concentration of credit risk with respect to trade and contract receivables as low, as most of its customers are leading financial institutions that are highly rated. The other debt financial assets at amortised cost, primarily consist of short-term deposits with a maturity over three months. All of the entity’s other debt financial assets at amortised cost are considered to have low credit risk, as the issuers of the instruments have a low risk of default evidenced by their strong capacity to meet their contractual cash flow obligations in the near term.

Most operating revenue and expenses in the various subsidiaries of the Group are denominated in the functional currency of each relevant subsidiary. The Group’s consolidated income statement is exposed to foreign currency risk arising from receivables and payables denominated in currencies different from the functional currency of the related entity. Credit Risk The Group is exposed to credit risk in the event of a counterparty’s default. The Group is exposed to credit risk from its operating activities (primarily trade receivables), from its financing activities and from the investment of its cash and cash equivalents and short-term financial investments. The Group limits its exposure to credit risk by rigorously selecting the counterparties with which it executes agreements. Most customers of the Group are leading financial institutions that are highly rated. Investments of cash and cash equivalents in bank current accounts and money market instruments, such as short-term fixed and floating rate interest deposits, are governed by rules aimed at reducing credit risk: maturity of deposits strictly depends on credit ratings,

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2020 UNIVERSAL REGISTRATION DOCUMENT